Retirement! Does it mean loss of competitive advantage?-Prof(CAPT) A.Nagaraj Subbarao
In the days of yore, retirement was a dreaded word. Employees prayed for extensions, at the work place and the possibility of staying on for a year or two more. Retirement policies in established firms dealt with ‘Retirement Benefits’ that the retiring employee would receive on retiring, and probably receive a greeting card occasionally and in smaller less organized firms, the employee would generally be left to fend for himself on retirement
We have shifted pages since then and today many people look forward enthusiastically to retirement driven by a dream of leisure, fuelled with greater economic freedom, while firms dread the day when experienced employees take flight. (Appendix II- CFO Magazine- PWC)
The world over millions will hang up their boots and leave the work place. The next 10 years will bring one of the largest "knowledge drains" in world history, as a huge percentage of the world's workforces begin to retire.
In India demographics indicate that we are one of the few fortunate nations that have a ‘young workforce’ that will drive our economy in the next couple of decades. However that does not mean that we are not without our concerns, pertaining to retirement as much of the emerging talent is of dubious quality and many agree not readily employable or of caliber to replace a seasoned employee without substantial training.
Another area of concern is the swift burnout that young people face and to counter this, change of work profiles and careers are becoming more the norm rather than the exception adding to the loss of knowledge akin to a person retiring. You might find a young IT professional setting up a restaurant!!!
Whatever may be the case it is accepted these days that ‘Human Resources’ are ‘Knowledge Resources’ and their loss can be staggering. It is imperative that the top management understands that people retiring are walking away with skills, knowledge and best practices that may never be fully or qualitatively replicated unless care is taken to see that knowledge is tapped, remains within the organization and is not lost forever.
Retaining key management talent and intellectual capital is the biggest concern of C-Suite executives and boards of directors according to a survey of HR executives who participated in Ernst
& Young’s 2007 Aging U.S. Workforce Survey: Challenges and Responses – An Ongoing Review.
What are the retiring demographics of my workforce?
(Business Case for Employee Sponsored Retirement Coaching Career Curve – Snider-1/13/2008)
If you can’t answer that question conduct a workforce assessment.
Questions to answer include:
· Who in your organization is eligible to retire in the next 10 years?
· What are your retirement policies?
· How many senior managers are eligible for retirement?
· How many knowledge connectors are eligible for retirement?
· What skills do employees approaching retirement possess?
· What is the market availability of required replacement skills?
· What key client relationships do employees approaching retirement own?
· Who is ready to take on the departing employees responsibilities?
· What mechanisms and programs must be put in place now to capture key competencies and critical work knowledge of employees who will be retiring?
· Demographic trends indicate you may be faced with large groups of both very young workers and very old workers. Will these two groups have different learning needs? Are you prepared to customize your current programs?
· Who would your competitors recruit for consulting work or employment opportunities?
· Are you ready with a ‘benefits’ program when an employee retires?
Some of the suggested ways to deal with retiring employees are:
· Keep the retiree focused.
It is very tempting for the person retiring to slacken off and work at reduced efficiency. This trend is also condoned by many organizations as the employee might have served them for many years. This is however not fair to either the employee or the organization, as it is akin to allowing a great cricketer to continue to play at the very end of his career though it is evident that he is well past his prime, making a mockery of the player and the sport. There is nothing more pathetic than to see a ‘great’ shuffling off into the sunset, head bowed in defeat. Keep the retiree motivated, focused and leave with a sense of pride and accomplishment, so that he/she would be available to you if the need arises.
Create a mentor.The retiree has years of insider knowledge about your organization, your industry, and your customers. Even the most highly qualified new B- School graduates simply can't know the organizational details, the culture, the history, and the people that the retiree knows. By creating a ‘Mentoring System’, much of the knowledge that could be lost may be tapped and retained while allowing the retiree to build bonds with youngsters who are replacing them within the organization. Why is mentoring so widely talked about? While one of the obvious reasons is knowledge management, as we have seen the other is that it is a great motivator for the person mentoring as it is recognition of the knowledge that he carries. It is also a tool that takes the retiree to the apex of ‘Maslow’s Triangle’ by showing him the path to self actualization, because after all what could be more noble than delivering and sharing knowledge.
Freddie Laker mentor to Richard Branson (founder of Virgin Atlantic Airways) told Branson, "Make a fool of yourself. Otherwise you won't survive."
Vivek Paul (President and CEO, Wipro Technologies) mentored by John Donahoe (President of eBay)
· Get organized and ready to hand over.Get the retiree to leave a well organized office for his successor and not in a state of confusion where valuable time is spent by the new incumbent in searching for data and information. In fact the retiree must be motivated to see that his successor is as comfortable as possible.
· Get people retiring to actively review the ‘Induction Process’ and ‘Employee Handbook’.While passing on well documented policies & procedures is very important the retiree can ponder over the following:
What do you wish you had known when you first started your job?
What are your secrets for getting the work done?
What shortcuts have you found along the way?
Can any best practices be documented to assist new employees?
What pit falls may be avoided?
Can the Employee Handbook be modified to stay current?
If you're serious about your organization, you ought to be nervous when you look at just how much human capital you'll lose over the coming years due to retirement or various other causes. But it doesn't have to be a disaster if you start preparing systematically and immediately. Identify which potential retirees are likely to leave with tacit knowledge, which is likely to leave a deep hole within the processes of your organization. Formulate a ‘Retirement Strategy’ and follow it through.
And don't make the cardinal error of focusing on only the C-Level executives. For example, the office manager who makes flight reservations, looks after the facilities, orders office stationery, and hires company vehicles probably knows the best vendors and which negotiating tactics work best for each of them. These skills are often overlooked, but they may save your company a great deal of money and time each year. Teaching all of this to a new worker would be very time-consuming, costly and often paved with mistakes that could have been avoided.
Be flexible.Many companies are creating strategies to keep their older workers longer. This gives them more time to train the next generation. Offer flexible scheduling, telecommuting, or part-time employment to your older staff. This will probably be appealing, especially for those who would enjoy a more gradual transition from the busy world of work to a life of retirement.
Get them to volunteer.Many large companies ask retirees to volunteer as mentors or trainers to their replacements, even after retirement. They can be particularly useful as trainers to get new generation workers up to speed quickly, in order to mitigate loss of talent. Many retired workers are open to this suggestion because it places a value on their wisdom and the new incumbent feels less threatened by a retired person, rather than an employee breathing down his/her neck. ( Appendix I)
Job Rotate.It is often assumed that job rotation is an exercise to motivate junior level employees, but this need not the case if it can prolong the longevity of an effective executive.Many upper-level managers and executives might be at the "burnout" phase right before they retire. They're tired, sick out of boredom and ready for a change. But they may be open to staying on in a slightly different role. For example, if they started their career in marketing and worked their way up to senior management, perhaps they'd like to go back to marketing for a year or two. This would give them fewer responsibilities and lower stress, but still keep them in the company and available for mentoring.
Capture their knowledge!.There are two types of knowledge: explicit and tacit. Explicit (obvious and easy to define) knowledge can usually be learned by simple questioning. It's the "this is how I do my job" knowledge. Tacit knowledge, on the other hand, is less easily defined, and people often don't really know they have it. Tacit knowledge refers to experiences, stories, and creative solutions that have been found over the years. ( Appendix III) Many companies are starting to use knowledge retention techniques to capture both types of knowledge. For example, you could conduct several recorded exit interviews, questioning the retiring person about her/his job, to capture her explicit knowledge. And you could also partner her with a younger replacement, which will "shadow" her/him for weeks or months before she leaves, to capture her/his tacit knowledge.
Knowledge Management programs are typically tied to organizational objectives such as improved performance, competitive advantage, innovation, developmental processes, lessons learnt transfer (for example between projects) and the general development of collaborative practices so as to allow an organization to remain competitive and confident. Knowledge Management is frequently linked and related to what has become known as the
learning organization,
lifelong learning and
continuous improvement. Knowledge Management may be distinguished from Organizational Learning by a greater focus on the management of knowledge as an asset and the development and cultivation of the channels through which knowledge, information and signal flow. This is possible only if knowledge is tapped, sifted and converted from implicit to explicit knowledge and then on to manuals/records which may be perused in a systematic way.
Organization, in the need to face competition and survive is striving for speed of action and creativity of thought and innovative practices, leading to increasingly complex organizations or complex systems.
Complex adaptive systems are special cases of
complex systems. They are complex in that they are diverse and made up of multiple interconnected elements and adaptive in that they have the capacity to change and learn from experience. The term complex adaptive systems (CAS) were coined at the interdisciplinary
Santa Fe Institute (SFI), by
John H. Holland,
Murray Gell-Mann and others.
Examples of complex adaptive systems include the
stock market, social insect and
ant colonies, the
biosphere and the
ecosystem, the
brain and the
immune system, the
cell and the developing
embryo,
manufacturing businesses and any human social group-based endeavor in a cultural and
social system such as
political parties or
communities. Organizations in today’s flat world are increasingly beginning to look like complex systems and cannot afford to deal casually with knowledge that has been accumulated by employees over time
Show the thumbs up!When the time comes for the person retiring to finally depart from the shores of your organization and sail his own ship, take the trouble to get the champagne out. For the retiree, make sure his or her time at work ends on a positive note, so that he/she acts as your ambassador and well wisher and is less inclined to join your competitor and help them with their SWOT Analysis.
· Strategize and win!
You don't want all that hard-won knowledge, which your company needs to succeed, to just waltz out of the door.
Manage team members who will retire soon, find out if they would be willing to mentor younger workers. Start creating strategies to slow this outflow of knowledge – capture future retirees' knowledge through exit interviews and "shadowing," and consider allowing flexible work arrangements.
Organizations will have to strategize with the following parameters as their base line.
The five major considerations that management should recognize before designing strategic solutions to address the issue include:
Succession Planning
Recruitment and Retention
Talent Management
Cross Generational Learning
Knowledge Retention
Each of these unique elements plays a defining role in identifying proactive strategies, but they all intersect in various ways.
It could be the greatest ‘Strategic Intervention’ that your organization has just made and differentiate your organization from predatory competition. Retirement planning should be a ‘Human Capital Process’ and treated as such and not as a knee jerk reaction.
Remember that only the fittest survive and in today’s Corporate Jungle, knowledge and it retention will determine success.
Sources:
1. Mentoring Executives and Directors
By David Clutterbuck, David Megginson.
2. DEED, Labor Market Information & U.S. Census Bureau, Local Employment Dynamics. Website:
lehd.dsd.census.gov/led 3. Kathy L. Hagen, Innovative Capital Strategies. “Knowledge Retention and Transfer: Introduction to Protecting an Organization’s Deeply Held Knowledge” Interview and Presentation to Northeast Minnesota State Colleges Conference: “Where will all the Boomers go? May 24, 2006.
4. Chindia's Workforce Worries- JULY 31, 2006 Business Week-INSIGHT By Nandani Lynton
Appendix 1.
Mr.Narayan Murthy as Chief Mentor of Infosys post retirement
Mr. Murthy is the Chairman of the Board and Chief Mentor of Infosys Technologies Limited, one of the largest global Information Technology (IT) consulting and software services providers in India. He founded Infosys in 1981 along with six other software professionals and served as the CEO of Infosys for twenty one years before handing over the reins of the company to co-founder, Mr. Nandan M. Nilekani, in March 2002. Under his leadership, Infosys was listed on NASDAQ in 1999. He served as the Executive Chairman of the Board and Chief Mentor from 2002 to 2006.
Appendix II
Goodbye Baby Boomers
The next decade may bring an unpleasant surprise to many companies: beginning in 2010, 25 million employees will be poised to leave the workforce. For many employers, that will represent a loss of knowledge and skills that will be costly to replace. CFOs are starting to get nervous; 63% are at least a little concerned. Solving the problem will require some unconventional thinking. Among the tactics companies are considering: mentoring programs to pass on older workers' knowledge, partial-retirement options, and actively recruiting employees over 50.
